Strategic Learning CycleOne of the many reasons why strategies fail is that strategic planning as an activity is separated from the rest of the function of the organisation. (See 6 reasons why strategies fail in implementation for more insight: http://strategiccoffee.chriscfox.com/2010/03/reasons-why-strategies-fail.html) A handful of executives retreat from the organisation to draft a plan which spends the year safely on their shelves until the process is repeated a year later.The Strategic Learning Cycle is comprised of 4 processes [documented as goals in this StratML rendition]Chris FoxCF_d7070d42-07a7-11e5-99e6-bc8fde3234da... ongoing impact on all decisions at all levels within the organisation._52ba8f40-1ecd-11e5-b313-46dd34e299ebTo embed strategic planning in the executive process ..._52ba91d4-1ecd-11e5-b313-46dd34e299ebAnalysisAnalyse the business and its environment_52ba92b0-1ecd-11e5-b313-46dd34e299eb1see 7 essential strategy analysis tools -- http://strategiccoffee.chriscfox.com/2009/06/essential-strategy-analysis-tools.html -- and Analyse the business and its environmentTarget Operating ModelDesign the organisation to deliver your strategy._52ba9724-1ecd-11e5-b313-46dd34e299eb1.1Once you've articulated your strategy, one of the next things to do is to design the organisation to deliver it. This is usually expressed in the form of a Target Operating Model (TOM). A TOM may be a new organisation you're going to set up,or it may be the end state for a change programme to be applied to an existing organisation.
The general approach is to define the people, processes and technology required to deliver the strategy...
You could go beyond the convention of considering just people and processes, and consider all 7 dimensions encapsulated in the McKinsey 7-S analysis or which people or Staff and technology or Systems are just two dimensions, but this is usually not necessary.
Your strategy implementation plan needs to consider all of the implications of the above: designing processes, hiring and training staff, acquiring or building up knowledge, and selecting, implementing, customising, building and/or integrating systems.
Designing a TOM is a significant piece of work. However, the real challenge lies in developing and implementing a TOM which actually delivers your strategy and differentiates your organisation from the competition.ProcessesIdentify all of processes which may be essential to the delivery of your strategy._52ba9828-1ecd-11e5-b313-46dd34e299eb1.1.1The most common approach for identifying the processes is to use Value Chain methodology popularised by Michael Porter. This allows you to identify not only the core processes, such as manufacturing, sales and distribution, but also the supporting functions, such finance, IT and HR, all of which may be essential to the delivery of your strategy. Within each of the process identified, it is important to identify where and how the organisation will deliver the process in a differentiated manner in order to deliver strategic value.
Once you identified and described your processes, it should follow naturally what people and technology the processes will require.Roles, People, Skills, Capabilities & KnowledgeIdentify the roles, numbers of people in each role, and skills, capabilities and knowledge required by each role._52ba990e-1ecd-11e5-b313-46dd34e299eb1.1.2For each process identified, identify the roles, numbers of people in each role, and skills, capabilities and knowledge required by each role. Consider also whether you will need to hire in new or additional people, provide additional training to existing people, or partner with organisations who already have the types of people you need. Finally, consider reporting lines, organisational design (structure - see also Structure Follows Strategy) and values. http://strategiccoffee.chriscfox.com/2013/11/structure-follows-strategy.html TechnologyIdentify the technology needed to support the processes._52ba99fe-1ecd-11e5-b313-46dd34e299eb1.1.3When considering the technology you will need to support the processes, it is important to think not only of computer systems, but also manual systems and any other supporting technologies. Consider also whether these systems and technologies exist and can be bought or rented, or whether you will have to develop bespoke solutions especially for your business. The more differentiated your processes are the more likely it is that you will need bespoke solutions, or that pre-existing solutions will require extensive customisation. Finally it is important to consider how these systems will be integrated and maintained.Vision, Objectives & ValuesArticulate a strategic vision, objectives and values_52ba9af8-1ecd-11e5-b313-46dd34e299eb2Articulate a strategic vision, objectives and values - develop and evaluate options, and make decisions to define the business's response to its environment - see strategic vision: 3 tests. http://strategiccoffee.chriscfox.com/2011/02/strategic-vision.html OptionsDevelop and evaluate options_52ba9bde-1ecd-11e5-b313-46dd34e299eb2.1Decisions & ResponsesMake decisions to define the business's response to its environment_52ba9cc4-1ecd-11e5-b313-46dd34e299eb2.2Action PlanCraft and implement a plan of action_52ba9e90-1ecd-11e5-b313-46dd34e299eb3the plan must require the actors in the business to do (or not do) something other than what they would otherwise have done - see, for example, The Ansoff Matrix. See also How to tune and prune your portfolio of strategic initiatives, Looking towards the 4 Horizons and How to use a RAID log. http://strategiccoffee.chriscfox.com/2012/05/how-to-extract-value-from-your.html & http://strategiccoffee.chriscfox.com/2007/10/as-you-are-putting-finishing-touches.html & http://strategiccoffee.chriscfox.com/2013/06/how-to-use-raid-log.htmlStrategic InitiativesTune and prune your portfolio of strategic initiatives_52baa2a0-1ecd-11e5-b313-46dd34e299eb3.1Once you've determined your portfolio of strategic initiatives, either as part of a new strategy you've developed, or just by listing out the initiatives currently underway within the organisation, you're in a a position to review them with a view to prioritising them and/or assessing their efficacy. The framework below provides a suitable basis for doing so. (You could, and probably should, also use a 4 Horizons analysis for this purpose.)Near- & Longer-Term Initiatves[Pursue a balanced set of initiatives] from low hanging fruit to strategic transformations_52baa390-1ecd-11e5-b313-46dd34e299eb3.1.1Firstly, have you got an even spread from low hanging fruit to strategic transformations? If you have only initiatives in the strategic transformation quadrant, you organisation is likely to stagnate during the short-term as the strategic transformation initiatives are likely to take a long time to bear fruit. Unless your organisation has very deep pockets, such a short term stagnation could place a strain on its cash flow and customers' loyalties. By including some "low hanging fruit" initiatives, you're likely to see earlier gains. This is also likely to boost staff morale and buy-in to the overall strategic change programme.
On the other hand, if you have only initiatives in the low hanging fruit quadrant, your organisation may be lured into a false sense of security, only to be toppled as significant environmental changes occur or your competitors implement step changes in their own strategies.Golden OpportunitiesContinually challenge the innovators within your organisation to imagine the golden opportunities_52baa494-1ecd-11e5-b313-46dd34e299eb3.1.2InnovatorsSecondly, are you continually challenging the innovators within your organisation to imagine the golden opportunities - those opportunities that produce disproportionately high benefits relative to their costs, risks and difficulty of implementation? By continually challenging your organisation to do so, your will hopefully move your portfolio upwards and leftwards on the grid over time.Projects to AvoidAvoid projects with a low cost-benefit ratio_52baa598-1ecd-11e5-b313-46dd34e299eb3.1.3Thirdly, are you successfully avoiding projects with a low cost-benefit ratio? These tend to be the pet projects of key decision makers and/or resource allocators - although they are sub-optimal relative to the rest of the portfolio they are pursued on irrational grounds based on personal agendas. These should be eliminated. This may need to be done carefully so that the people with vested interests in these initiatives do not become alienated from the rest of the strategic change programme. However, it is important that this entire analysis is done on the basis of sunk costs - that is sunk costs should be ignored from the costs side of the analysis. A project that started out as a pet project but which has already spent 90% of its costs may now be low hanging fruit if you believe all of the benefit are still attainable for the cost of only 10% of the initial costs. Clearly you can't get the 90% of costs already spent back, but you should consider them a valuable lesson in the importance of avoiding these kind of projects in the future.MetricsMeasure success against the vision and objectives_52baa688-1ecd-11e5-b313-46dd34e299eb4it's important to measure against the vision, objectives and values, rather than just against the plan; you want to measure results, not just effort - see How to measure success against strategic vision and objectives, and Control Processes in the Strategic Learning Cycle. -- http://strategiccoffee.chriscfox.com/2012/03/how-to-measure-success-against.html & http://strategiccoffee.chriscfox.com/2012/12/control-processs-in-strategic-learning.html --
In an ideal world, once the strategy is in place and the execution plans have been laid, the organisation leaps into action to deliver it and reap the benefits.
In practice, of course, things are never that straight forward. As the old maxim goes "If you can't measure it you can't manage it", and if you can't manage it you can't make sure it gets done. That is why Measuring Success Against the Vision and Objectives is the 4th stage of the Strategic Learning cycle.
Conventional measurement techniques employed by organisations tend to be inadequate for measuring what is really strategically important in organisations. This often causes people to (erroneously) claim that the aforementioned maxim is incorrect. However, what it really means is that we need better measurement methodologies.
The most common methodology for measuring (and therefore managing) strategy implementation is the balanced scorecard. It looks at the organisation's strategy from four perspectives, and puts measures around each. The four perspectives are:FinancesEstablish mutally beneficial financial arrangements with shareholders and other stakeholders or participants in the organization's value chain_52baa796-1ecd-11e5-b313-46dd34e299eb4.1ShareholdersHow do we look to shareholders? How do we fund ourselves? What financial arrangements do we have have with other stakeholders or participants in our value chain?CustomersAttract new customers and strengthen relationships with existing customers_52baa89a-1ecd-11e5-b313-46dd34e299eb4.2CustomersHow do customers see us? How can we attract new customers and strengthen our relationships with existing customers?Internal ProcessesContinously improve internal processes that differentiate the organization in the market_52baa9a8-1ecd-11e5-b313-46dd34e299eb4.3What must we excel at? What must we continue to improve at? How do our internal process differentiate us in the market?Innovation & LearningContinuously improve and create value_52baaac0-1ecd-11e5-b313-46dd34e299eb4.4Can we continue to improve and create value (both within the organisation and by reaching beyond its boundaries)?2010-03-272015-06-29http://strategiccoffee.chriscfox.com/2010/03/strategic-learning.htmlOwenAmburOwen.Ambur@verizon.net